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[How to validate opportunities in a
foreign market quickly and gain new
sales sourced from abroad. An efficient
6-step Go-to-Market strategy.]
The Entrepreneurs' guide
to: Lean Exporting
An Efficient Go-to-Market Strategy
July 2013
By: Maria Cristina Hernandez-Global MBA
Maria Cristina Hernandez is a Part-time
Professor at Tecnologico de Monterrey,
Guadalajara campus in the department of
International Business and the Department of
Innovation and Entrepreneurship. She is the
founder of Managed Strategies, an international
sales and market entry consultancy.
© 2013, July 29th by Maria Cristina Hernandez All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.
The Entrepreneurs' guide to: Lean Exporting
Page 1 www.managedstrategies.com
The Entrepreneurs' Guide to: Lean Exporting July 2013
By: María Cristina Hernández Global-MBA
I regularly speak with small to medium sized enterprises (SME’s) about taking their business
international or exporting to new markets; which at first, often appears overwhelming and
costly. At the same time executive management (often the direct owners of SMEs), desire to
increase revenues and diversify their companies' sales by exporting internationally. Likewise,
the owners of SMEs frequently do not have the time to dedicate to new markets because their
day to day activities are divided between running operations and managing domestic sales. The
consequences of not having time to focus on new markets are delayed exports and revenue
growth and lost opportunities to gain new clients abroad. A solution to this conflict will be
addressed in this article and will help managers quickly validate opportunities in a foreign
market and gain new sales sourced from abroad.
So, how do you export products into new markets without losing track of domestic operations
and budgetary commitments? I propose that you can achieve both goals by using a “Lean
Exporting” approach. The Lean Exporting approach is a methodology that has been
implemented to help companies sell their products and services abroad, thereby successfully
exporting with minimal upfront investment. The process can be implemented as a pilot export
project for your company and if properly implemented, it will uncover whether interest in your
products is achievable in a foreign market and therefore would warrant further time and
investment.
The Lean Exporting approach is executed by a series of 6 steps to determine how a company
can identify sales opportunities abroad, quickly and resourcefully.
Lean Exporting: The six steps
1) Select Your Market
2) Create a List of Targeted Sales Channels
3) Validate the List of Targeted Sales Channels
4) Solicit & Identify Interest
5) Identify Export Price & Calculate Landed Price
6) Close the Sale
The Entrepreneurs' guide to: Lean Exporting
Page 2 www.managedstrategies.com
Step 1: Select Your Market
Selecting your market is implemented by identifying elements of interest. There are 4 ways
your company can investigate choosing a market.
1) Inquires
2) Blind exporting
3) Unsolicited sales
4) Market Research: Trade Office
Inquires
Companies in operation for 5 to 10 years will have received inquiries from abroad but may have
chosen not to sell to those customers. These inquiries from abroad provide a general indication
that your products may sell well in those countries. Therefore, selecting the market based on
past inquires is appropriate.
Blind Exporting
Another often-overlooked indication for selecting your market is to take note who is buying
your product. For example, perhaps your products are being bought locally by an international
broker or distributor and exported to a different market. Likewise, you could already be
indirectly exporting, but unaware of it. I would encourage you to look at your customers and
observe who is purchasing your goods, approach the international broker/ distributor, ask
where your products are selling, and ultimately choose to expand sales into those markets.
Unsolicited sales
Another characteristic that I have seen in SMEs is that the sales staff are actually selling abroad
but the focus on this customer is minimal; I have termed this approach “reactionary exporting”
from unsolicited sales. If this is the case, I would recommend talking to your sales staff and
identify those international customers from whom you have received inquiries. This
information can provide key insight into which countries to focus your sales and distribution
efforts.
Market Research: Trade Office, University or other exporting assistance organizations
The Entrepreneurs' guide to: Lean Exporting
Page 3 www.managedstrategies.com
If you do not have the elements of interest previously listed then take a market research
approach. Choose a market by conducting basic research on where the products would be well
received. I recommend contacting your local government trade office, a University or another
similar organization(e.g. UK Trade and Investment (UK), ProMexico (Mexico), US Commercial
Service (USA), Proexport Colombia (Colombia), etc.) These trade offices or organizations have
resources that can help. Specifically, potential resources include: up to date market research,
broad statistical analysis on import volume, and market growth rates. Furthermore, financing
options are potentially available for exporting as well as insider knowledge on grants and
discounts to attend trade shows. I recommend choosing a market where international taxes
and duties are low. This can be accomplished by identifying a market that has a preferential
trading agreement with your country and the target country. Trade agreements include NAFTA,
EU, and MERCOSUR, Etc.
TIPS: Identify the harmonized tariff code(s) or HS code for the products. Speak to a customs
broker in the target country to determine the necessary import requirements and other
country specific certifications required.
Step 2: Create a List of Targeted Sales Channels
Once you have decided the market, identify the market approach. There are two approaches
to take; (A) direct, or (B)indirect. A direct approach would be eliminating as many
intermediaries as possible to sell directly to a major buyer or final sales channel. Alternatively,
an indirect approach sells to an intermediary such as an importer, broker, or distributor. These
definitions serve as a guide and are not an exact science because in some situations there may
be leveraging of both approaches simultaneously. For example, sales representatives can
facilitate a direct approach. In addition, a major distributor could be the best direct approach
since laws in some countries prohibit the ability to sell directly to the final retailer. This is the
case for Alcoholic beverages in the USA. Again, these definitions serve as a general guide.
The positive aspect of the direct approach is that the company keeps costs down that would
directly increase the selling price of the product. For every channel that a company engages,
there is an incremental markup or margin associated with the sale. In addition there is more
control over your relationship with the Sales Channel allowing quicker feedback and the ability
to adapt to the needs of the buyer, which may increase sales volumes over time.
The negative side of implementing the direct approach is a longer sales cycle due to the
number of processes required to set up buyer and supplier accounts, as well as preparing initial
documentation, which may include assessing and understanding how to use a new Electronic
The Entrepreneurs' guide to: Lean Exporting
Page 4 www.managedstrategies.com
Evaluation:
What is the ideal sales distribution channel you would like to have?
Do you want to be “hands on” and in control of your relationships with your final
customers/buyers or take a “hands off” approach and let an intermediary manage the
transaction? Would you prefer a hybrid of both approaches? If yes, what does that look
like?
data interchange (EDI) platform or new importation documentation and finally, simply going
back and forth with the buyer on exactly the quantities they would like to order for the first
time.
On the other hand, the positive aspects of the indirect approach can be the following. Often the
distributors are already set up in the accounting system as vendor, saving you time. Also, they
know the business culture and how to help guide you on requirements for importing. On the
contrary, the incremental markups will increase the products price through an intermediary
thereby possibly limiting the potential sales volume. Additionally, there could be a conflict of
interest with similar products that the intermediary is distributing, thereby cutting into your
potential profits. In any case, due diligence is important and having a good relationship with
your buyer will limit the chance of potentially negative issues.
In general, most of my clients desire to remain in control of the sales relationship, however,
they still want to have the local sales agent or representative on the ground for sales support
and insider knowledge. Thus, they generally implement a hybrid of contracting a sales
representative in charge of monitoring and continuing the relationship with the distributor,
buyers, retailer, etc. Accordingly, defining what approach your company will use depends on
how involved or committed you plan to be with your customers in your target market.
Once you have defined an approach, create a spreadsheet of at least 100 prospective targets
(e.g., OEM manufacturer, distributor, importer, sales representatives, etc.) How does one
develop this list? My methods include trade shows and trade show directories. Past trade show
directories are a great resource, especially for business abroad. Some past directories or
catalogues are posted online to search through and extract your list. Also, attending a trade
show is a great strategy to obtain key contacts and to schedule meetings with prospective
buyers. It is also a great idea to reach out to trade organizations and Chambers of Commerce
abroad. For example, American Chambers (AMCHAM) is an organization that has a trade and
investment department which, if you are a member, can grant you access to their research
The Entrepreneurs' guide to: Lean Exporting
Page 5 www.managedstrategies.com
1. Name
2. Title (e.g. Who is the buyer? Who is the person in charge of imports and
procurement?)
3. Phone number
4. Email
department. Other resources can include, International Chambers of Commerce, trade
organizations, Kompass B2B, LinkedIn, directory of Importers and Exporters, and specialized
trade magazines.
Step 3: Validate the List of Targeted Sales Channels
Now you have your list, but possibly not all the contact information or the key contacts. It is
now time to pick up the phone and start calling. My advice is DO NOT SELL ANYTHING! This is
because you should identify the correct contact before pitching the product. This simple task of
calling and validating the correct contact information will save time.
Likewise, call through the list and fill in missing data by validating key information:
The script I usually use is: “I am calling on behalf of a European/Mexican/American company
that is interested in sending the buyer information about their products. Who is the correct
person to contact?” Then verify all the necessary data.
Step 4: Solicit & Identify Interest
After completing validation, the next step is to implement a basic sales strategy. This initial
point of contact is “the fishing email”. The fishing email is an email that is designed to not push
the sale to the buyer but instead strategically identify interest and pull the potential buyer or
prospect towards you, thereby appropriately identifying interest. Similarly, the key indicator is
to identify if the potential buyer is hungry for your product, thus hooking their interest, and
possibly catching the fish or closing the sale.
To summarize the process:
1. Draft an email that briefly describes the company and the products. The tone should
be friendly, stating the main goal, then conclude by asking if the potential buyers are
interested. Don’t be afraid to be specific on whether they are interested. As a
business owner, you need to know quickly if there is an opportunity. I recommend
sending the fishing email with a marketing brochure or PowerPoint presentation, 5
to 8 slides in length. (Buyers don’t have time to look at something too long.
The Entrepreneurs' guide to: Lean Exporting
Page 6 www.managedstrategies.com
Moreover, a large file will be rejected by their mail server). Make sure to include key
data: about us or corporate information, competitive advantage, products and
contact information.
2. After you send out your email, sit back and wait. In a about week and a half you
should receive responses as to potential interest and will identify whether selling
into the market is feasible. Also don’t be afraid to call or resend the email stating:
“Have you received my email? I would like to know if you are interested in our
product?” Again, the goal is to gain customer feedback quickly.
3. If you have not identified interest after 2-3 weeks, I would recommend stopping the
project and revaluating. However, if you have successfully identified interest, you
have a choice to make. You can either conduct further market research and produce
an international marketing plan, which traditional business academics would
advocate. Otherwise, the entrepreneurial route is appropriate and consists of
advancing with the sales process and addressing each concern as it appears. This
leads to the next critical step.
Step 5: Identify the Export Price & Calculate the Landed Price
Before you engage in sales negotiations, it is important that you complete a landed cost pricing
analysis. This analysis will give you the ability to make strategic price decisions that may
increase your company’s sales margins, or alternatively uncover that the final price to the
customer is too high for the market thereby requiring the company to reevaluate the project or
take strategic cost cutting decisions.
Landed cost is the total expense of sending the goods into the foreign market and then
factoring in the margins to the distributor and/or retailer. These costs increase your selling
price and can include, but are not limited to, transportation costs, duties, value added taxes,
etc. Again, the purpose of this exercise is to evaluate your price in comparison to similar
product in the export target country. Based on this analysis, you can make strategic decisions.
Here is a quick guide to help you calculate the landed price:
What is your ex-works price (the price of the product when it is picked up from your
warehouse or factory)?
What is your theoretical purchase order or pro-forma? Is it: 1 pallet, 2 pallets, a 20ft
Container, a 40ft Container?
The Entrepreneurs' guide to: Lean Exporting
Page 7 www.managedstrategies.com
All freight costs. Acquire a quote from a freight forwarder based on your Incoterms.
Include insurance and ask for other costs associated (spread the freight costs over the
goods sold, thereby increasing the cost per unit of the product).
Call a customs broker and ask about duties and taxes. Are there other import
requirements, (FDA, lab testing, labeling, certification)? In addition, a customs broker
may be able to give you a Harmonized Tariff Code to categorize your product.
Determine if there is a % or fee to import the products into the country.
Determine your sales channel margins or markups (e.g. distributor %, retail %).
Determine the foreign sales tax and apply it to each transaction.
Do you have a sales representative? Are you paying them a % of the invoice or a
different method? Apply that cost.
Gather Reference Pricing of substitute products or competitors’ products in the foreign
market.
Once you have collected this data, you can determine your estimated landing cost in the target
country. Take these costs and apply them on top of your ex-works price. Then take this new
landed price and compare it to other similar products priced in the market. Once you have this
information, you have the power to make strategic decisions on how you could increase or
decrease your profit margin, cut a channel, or not export if the price is too expensive or other
relevant factors. Again, this activity can be implemented by starting with your ex-works price.
[Note: It could be argued that Step 5 should be Step 2. But if we are implementing “Lean
Exporting”, it requires minimal investment. Therefore, putting export pricing second takes up
front time investment when a company assumes they have a chance in a market, but in fact
there may not be any interest. So placing this activity after Step 4 means that indeed there is
interest in the market and further time investment is warranted in Step 5.]
Step 6: Close the Sale: Meetings & Payment
Congratulations! The company has arrived at the last step. The buyer has requested samples,
pricing and/or other data. Subsequently, I recommend investing the money and visiting the
market to meet the buyer. Nothing is more powerful than meeting with the buyer in person
and securing the trust of both parties, resulting in a continued loyal relationship. Moreover,
most international negations cannot be done by email and the phone alone. Aspects such as
product placement, vendor contracts and other questions or doubts are better discussed in
person.
The Entrepreneurs' guide to: Lean Exporting
Page 8 www.managedstrategies.com
In relation to payment terms, I recommend requesting upfront payment or an irrevocable
Letter of Credit. After a relationship has been secured and sales history built, you can then
change to a payment % allocation. (eg. 70% up front 30% on delivery or add credit terms).
Final Comments & Recommendations
At first, exporting and selling abroad may seem overwhelming, but in the long run, it becomes
second nature. Just like any new account or any new sale, it is initially challenging, but once it is
completed for the first time it is much easier and faster to replicate.
By implementing the “Lean Exporting” approach, a company can identify quickly and
resourcefully if there is real opportunity to export and expand sales or whether to reevaluate
and invest elsewhere. In closing, you do not need hundreds of thousands of dollars to export
your products or services abroad. Instead, what a company needs is the management’s
commitment and dedication to expand export sales and the lean exporting strategy in place to
tactically invest time and resources leading to an efficient go-to-market strategy.
Other Reminders:
Don’t forget to register trademarks prior to exporting into the country of import.
Insurance: Once you export, be certain that you insure the total value of your goods
from point to point (talk to your freight forwarder).
Lean Exporting Review:
The Entrepreneurs' guide to: Lean Exporting
Page 9 www.managedstrategies.com
Cristina Hernandez is an International Sales Director, specializing in go-to-market
strategies for SME’s and global companies. Specifically, she assists foreign companies to
do business in Mexico, and also assists Mexican companies to export their products to
new markets. In her current position, Ms. Hernandez is founder at Managed Strategies,
an international sales consultancy. She advises the USA, EU, and Mexican companies on
how to strategically enter and expand sales in Mexico and the USA. In addition, she is a
part-time Professor at Tecnológico de Monterrey, Guadalajara Campus for the Department of
International Business and the Department of Innovation and Entrepreneurship. She previously worked
as a Trade and Investment Officer for the British Embassy in the UK Trade and Investment (UKTI) office
based in Guadalajara, Mexico. She holds a Global-Masters in Business Administration in International
Management from the Thunderbird School of Global Management, AZ, USA and Tecnológico de
Monterrey, N.L. Mexico. Her B.A. is in Cultural Anthropology from the University of California, Santa
Barbara. Ms. Hernández brings over 9 years of professional experience in investment management,
startup ventures and international business between the USA, EU and Mexico. She is from Orange
County, California, USA.